Fimbristylis dichotoma, Ammannia baccifera and their co-plantation consortium FA independently degraded Methyl Orange, simulated dye mixture and real textile effluent. Wild plants of F. dichotoma and A. baccifera with equal biomass showed 91% and 89% decolorization of Methyl Orange within 60 h at a concentration of 50 ppm, while 95% dye removal was achieved by consortium FA within 48 h. Floating phyto-beds with co-plantation (F. dichotoma and A. baccifera) for the treatment of real textile effluent in a constructed wetland was observed to be more efficient and achieved 79%, 72%, 77%, 66% and 56% reductions in ADMI color value, COD, BOD, TDS and TSS of textile effluent, respectively. HPTLC, GC-MS, FTIR, UV–vis spectroscopy and activated oxido-reductive enzyme activities confirmed the phytotrasformation of parent dye in to new metabolites. T-RFLP analysis of rhizospheric bacteria of F. dichotoma, A. baccifera and consortium FA revealed the presence of 88, 98 and 223 genera which could have been involved in dye removal. Toxicity evaluation of products formed after phytotransformation of Methyl Orange by consortium FA on bivalves Lamellidens marginalis revealed less damage of the gills architecture when analyzed histologically. Toxicity measurement by Random Amplification of Polymorphic DNA (RAPD) technique revealed bivalve DNA banding pattern in treated Methyl Orange sample suggesting less toxic nature of phytotransformed dye products.